Messrs Freshtop Fruits Ltd Vs C.S.T.-Service Tax (CESTAT Ahmedabad)
CESTAT Ahmedabad held that the coverage and taxability of foreign agent service which are alleged to have been received outside India needs proper examination and hence directed for de novo adjudication
Facts-
During the scrutiny of ST-3 returns and Income tax return it was noticed by the department that the appellant, Messrs Fresh top Fruits Ltd, had shown Foreign Selling Expenses and Foreign Sea Freight in their books of account. The said expense and sea freight expenses 66A and Appellant have not paid the Service tax on foreign selling expenses and sea freight expense. After scrutiny of records and documents, a show cause notice dated 07.10.2011 was issued to the Appellant proposing a service tax demand of Rs. 4,10,38,988/- and imposition of penalties under the provisions of the Finance Act, 1994.
While the aforesaid show cause notice was pending adjudication, another show cause notice dated 05.10.2012 for the subsequent period also came to be issued on the same issue by the department proposing to demand of Service tax of Rs. 47,05,066/- along with another proposal for interest and penalties under the Act. After following the due process vide impugned common Order the Learned Commissioner has confirmed the entire demand raised in both the SCNs along with interest and penalty. Being aggrieved, the appellant filed the present appeal.
Conclusion-
It is not in dispute in the present matter that the services provided by Foreign Agents were received by Appellant. The limited case of Appellant is that the services were not received in India. They claim to have received the services outside India. Had they have any office or establishment in said Foreign Countries or elsewhere outside India to receive Foreign Agents services outside India? We are of the view that, for the ends of justice, the appellant should get an opportunity to discharge their burden of proof in fresh proceedings.
In the instant case, it has also been contended by the assessee that the services provided by Foreign Agents do not fall within the scope of definition of C&F Agent Service and classified under Business Auxiliary Service and services of a commission agent in relation to agricultural produce were exempt under Notification No. 13/2003-ST dated 20.06.2003. But what appears from the impugned order is that this aspect was also not properly examined by the learned Commissioner. This is another reason for de novo adjudication of the case.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This is an Appeal against Order-in-Original No. STC/03 to 04/COMMR/AHD/2013 dated 25.02.2013 passed by Ld. Commissioner of Central Excise and Service Tax, Ahmedabad.
02. Brief facts of the case are that during the scrutiny of ST-3 returns and Income tax return it was noticed by the department that appellant had shown Foreign Selling Expense and Foreign Sea Freight in their books of account. The said expenses appeared taxable under Section 66A and Appellant has not paid the Service tax on foreign selling expenses and sea freight expense. After scrutiny of records and documents, show cause notice dated 07.10.2011 was issued to the Appellant proposing service tax demand of Rs. 4,10,38,988/- and imposition of penalties under the provisions of Finance Act, 1994. While the aforesaid show cause notice was pending adjudication, another show cause notice dated 05.10.2012 for the subsequent period also came to be issued on the same issue by the department proposing to demand of Service tax of Rs. 47,05,066/- along with other proposal for interest and penalties under the Act. After following the due process vide impugned common Order the Learned Commissioner has confirmed the entire demand raised in both the SCNs along with interest and penalty. Aggrieved by the impugned order, the appellant filed the present appeal.
3. Shri Paresh M. Dave, learned counsel appearing for the appellant submits that the invoices are raised by the consignment agents when they sold and supplied the exported goods to buyer like super markets in Europe. After the goods were sold or deemed to have been sold by the Appellant, no one can render any service to the seller of such goods. If the appellant raised invoices in India and therefore the goods were sold or deemed to have sold in India and the title was also transferred in India, itself, then no question of tax on any services/ rendered by the C&F Agent would arise. If the goods were sold in India and the title also stood transferred to the buyers in India, then all subsequent activities and services were with regard to the goods already sold by the appellant ; and once the goods were sold or deemed to have been sold in India itself, then the appellant ceased to be the owner of the goods and consequently, services rendered in foreign countries for such goods were not taxable because the goods were already sold in India and title of goods stood transferred to the buyers. It is clear factual error by the Commissioner in concluding that the goods were sold or deemed to have been sold in India, because then the persons on whom the so called invoices were raised were the buyers and owners of the goods, and the appellant‟s interest in the goods no longer subsisted.
3.1 He further submits that all the activities and services by the consignment agents have been performed after export of the goods when the goods landed in foreign countries. Therefore, the conclusion that a part services was provided by the appellant in India is ex-facie illegal because the appellant has not provided any services, whereas the revenue‟s case is that the Appellant has received services of C&F agent from the agent located in foreign countries.
3.2 He also submits that in the present case, the amount /value of expenses on which service tax is demanded are all for the activities and services beyond the territory of India; because all the heads of expense initially paid by the consignment agent are for the activities and services after the goods leave India. From the evidence on records including the statement of the Appellant’s Senior Manager (Accounts), it is an admitted fact that the consignment agent have provided all the services in question after the goods left India, and after the goods were received at foreign Ports. Rule 3 of the Taxation of Service Rules, 2006 does not intend to tax services that were rendered in connection with business or commerce outside territory of India. When no service was rendered in India, liability of service tax would not arise. When any service is provided outside India and the role of the overseas entities commence upon the landing of the goods in foreign countries, then the role of the overseas entities commenced and ended beyond the border of India. Rule 3 of the Taxation of Service tax Rules 2006 is not attracted in such case. He placed reliance on the following decisions:-
